In its first trading session after closing an explosive 2023, the Nasdaq technology index fell 2%
Shares of big tech companies fell on Tuesday, a potentially worrying omen as the darlings of 2023’s explosive profits lost hundreds of billions of dollars in market value.
Key Data:
- The technology-focused Nasdaq Composite index fell more than 2% Tuesday afternoon in the opening session of the year, a much wider loss than the Dow Jones Industrial Average’s 0.2% decline and the S&P’s 0.9% decline. 500.
- If the losses continue, Tuesday will be the worst day for the Nasdaq since Oct. 25 and its lowest close since mid-December.
- Much of the decline in the technology sector was driven by a 4% drop in Apple shares, a drop precipitated by the downgrade of an analyst who questioned why the company, with a market capitalization of $2.9 trillion, was trading at such an expensive valuation considering its negative earnings and profit growth.
- Other members of the “magnificent seven” tech stocks, which collectively gained $5.1 trillion in market capitalization last year, also faltered Tuesday.
- Alphabet, Amazon, Meta, Microsoft, Nvidia and Meta all fell 1.6% or more, while Tesla was the only member of the magnificent seven in the green, as its shares fell less than 1% after reporting electric vehicle deliveries in the fourth quarter higher than forecast.
Featured Figure:
Around US$330,000 million. That’s how much market value the Magnificent Seven lost on Tuesday.
Key Background:
The Nasdaq is up more than 40% in 2023, erasing most of 2022’s historic losses and easily outperforming the respective performances of the Dow and S&P. Much of the tech gains were driven by investor optimism about the long-term profitability of advances in generative artificial intelligence, rather than a corresponding rise in profits, leading to concerns about the health of the rally.
Surprising Fact:
Microsoft is now just $100 billion behind Apple for the title of the world’s most valuable company, a title Apple has held since late 2021.